California lawmakers struck a deal with Uber and Lyft that will allow app-based drivers to form unions and could make ride-hail fares more affordable.
The agreement is a win for gig workers who have long been classified as independent contractors, and thus, ineligible for certain protections that employees receive, like the right to collective bargaining.
Gov. Gavin Newsom, alongside Senate President Pro Tem Mike McGuire and Assembly Speaker Robert Rivas, announced Friday support for two pieces of legislation that form a pathway for app-based drivers to unionize. Assembly Bill 1340 is sponsored by SEIU California, and Senate Bill 371 is sponsored by Uber and Lyft.
Newsom called it an “historic agreement between workers and business that only California could deliver.” He said labor representatives and the companies “found common ground that will empower hundreds of thousands of drivers while making rideshare more affordable for millions of Californians.”
The agreement creates a model for drivers to be able to organize for increased pay, job protections, and other benefits.
In exchange, California regulators say they’ll support legislation to reduce expensive insurance coverage mandates that ride-hailing companies have to pay. Uber and Lyft have attributed those insurance payments to higher ride fares in California and lower driver pay.
“With Sacramento now aligned on the need to make rideshare more affordable in California, we’re happy to see these two important pieces of legislation moving forward together,” Ramona Prieto, Uber’s head of public policy for California, said in a statement.
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The deal comes years after Uber, Lyft, and other app-based gig companies spent more than $200 million to convince California voters to pass Prop 22, which classifies gig workers as independent contractors while granting them limited benefits.
Drivers have long criticized the system for giving companies broad control over pay and deactivations, leaving them limited power to influence earnings or working conditions. Supporters of the new agreement say it could give drivers a stronger voice in pushing back against unfair treatment.
“Like many immigrants, driving for gig companies has been my main source of income,” said Margarita Peñalosa, a gig driver from Los Angeles and member of California Gig Workers Union. “Some drivers fear getting deactivated and losing their jobs, so we often feel pressured to stay silent instead of demanding fair treatment. No one should have to risk their livelihoods just for asking to be treated fairly. AB 1340 would give gig drivers a real voice and the protections we need to be treated with respect and dignity.”
The deal could have ripple effects across other states. In 2024, Massachusetts voters approved a similar initiative to allow ride-hail drivers to form unions and negotiate pay, benefits, and working conditions.
This article was updated with a statement from Uber and an Uber driver.
